Tesla Now Pushing for Direct Sales in Virginia; Dealers Association Pushes Back

4 years ago by Eric Loveday 20

Tesla Vows to Fight to Keep Stores Like This Operation in All States They're Located In

Tesla Vows to Fight to Keep Stores Like This Operation in All States They’re Located In

Tesla’s state-by-state battle for direct sales seemed to have died down for a bit, but now it’s roaring back into action again.

Tesla Model S

Tesla Model S

Remember when all those Model S sedans hit the track at Richmond International Raceway?  That was the start of a brewing battle in Virgina, which is slowly heating up.

Back in April, Virginia’s Department of Motor Vehicles blocked sales by Tesla on grounds of the automaker violating laws that prohibit manufacturers from being dealers.

The issue in Virginia though is not as cut and dry as the state’s lawmakers are trying to say it is.

Virginia has made 14 exceptions to the rule that prohibits automakers from acting as dealerships.  The state notes that most of those exception were for specialty manufacturers, such as those who make one-off motorcycles, trailers and even commercial-use trucks.

But if Virginia can allow for exceptions to the rules, then why not let Tesla in?

Virginia is not like North Carolina.  In North Carolina, lawmakers attempted to ban Tesla from selling its vehicles over the Internet.  That ban never made it into law.  On the other hand, Virginia has no problem with Tesla selling its vehicles via the Internet.  However, Tesla wants stores in Virginia and the state is not allowing that to happen.  At least not right now.

Tesla is supposedly working on some sort of deal with the state to be allowed an exception to the rule.  This implies that Tesla is attempting to work in conjunction with the Virginia Automobile Dealers Association to ink out an agreement.  As in other states, the dealers association in Virginia doesn’t seem too fond of Tesla’s master plan.

Dealers imply that consumer protection is why automaker can’t sell direct.  This, according to Tesla attorney James Chen, is a joke:

“We are fighting a well-funded, well-established, politically connected organization looking out for its own monopolistic interests.”

It’s not consumer protection that’s at stake here.  It never has been a battle over that.  If consumer protection was the issue, then why not let the consumers decide how they’d prefer to buy a vehicle.  Chen is right.  It’s dealers and their monopolistic interests.  Anyone who argues otherwise needs to wise up.

Source: Pilot Online

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20 responses to "Tesla Now Pushing for Direct Sales in Virginia; Dealers Association Pushes Back"

  1. Nelson says:

    Some States must have so much money on hand that they can forgo Model S sales tax revenue.
    Maybe those States don’t need Federal assistance funds either.
    When will Congress step in and remind these States of the U.S. Constitution Commerce Clause?

    NPNS!
    Volt#671

  2. David Murray says:

    Consumer protection.. That’s hilarious. Dealers are the consumers worst enemy.

    1. kdawg says:

      I think we need another level of someone getting a piece of the pie.. um I mean protection. We can’t just let dealers sell direct to customers! We need to have a dealer for the dealers. You know, another middle man… for protection.

      1. Steven says:

        I’ll have to ask my manager about that…

  3. Look at it slightly differently: Tesla stores are a monopoly, while the dealers compete with each other, even in the same brand. That’s one reason dealerships are actually good–if you could only buy cars from the OEM, there would be little flexibility on pricing. And if one dealer screws up a repair, you can take it to another dealer.

    1. vdiv says:

      The only flexibility in sales pricing from the dealerships is in the markup that they impose or in the OEMs incentives they receive.

      I think the monopoly argument is more valid when comes to service. With dealerships and third party shops one has a choice where to have their car serviced (albeit not with the manufacturer directly). Currently with Tesla Motors that is not the case and if a disagreement arises the customer has no choice but to pursue a legal path.

    2. Chris O says:

      Tesla a monopoly..they wish! If consumers don’t like their pricing or service they will take their business to another carmaker pretty quick.

      Never forget: the forced middle man in car sales is a US idiosyncrasy. It doesn’t exist anywhere else in the world and consumers are a lot better off for it.

      Everyone making a decent product should have the self evident and inalienable right to sell the fruit of their labour to other people without the forced intervention of a middleman.

      Avoids situations like this where that middleman is already committed to existing technology and has little interest in making the newcomer succeed.

      1. Bret says:

        “Everyone making a decent product should have the self evident and inalienable right to sell the fruit of their labour to other people without the forced intervention of a middleman.”

        This is really well said Chris. I think NADA and other dealer organizations see the writing on the wall. If Tesla is successful in selling direct, their days may be numbered. Most consumers would be very happy to skip the “dealer experience”, including myself.

    3. Foo says:

      What? Look up the definition of monopoly. Tesla is not a monopoly. There are numerous other cars on the market that you could buy.

      Yeah…. dealerships are “good”. Hah. That’s why so many people get such “great deals” every day (taken for a ride) and always get the “best” price for repairs (taken to the cleaners).

      Give me a break.

  4. Spec says:

    The genius about Tesla’s push is that he is fighting against a cartel in red states and thereby exposing massive hypocrisy of these alleged ‘free-market’ conservatives. Such battles should easily be winnable because the liberals support the EV company and the conservatives need to support free-market principles.

    1. kdawg says:

      You would think that it would be a cut & dry case, but many times money wins whether it’s blue/red/green money. Elon repeats that the overwhelming majority of the public wants direct sales, but the politicians don’t act because they are essentially paid off.

    2. ItsNotAboutTheMoney says:

      Direct sales are more efficient, so mean fewer jobs.
      Plug-in vehicles need less maintenance.
      BEVs do most miles on home charging so need less supporting infrastructure.
      Less gas used means fewer gas stations.
      Less gas used means fewer distributors.

      I wouldn’t be surprised to see many Democrats nervous of the impact on employment easily encouraged to take the position of their willing donors.

      1. Foo says:

        Oh…. doom and gloom!!!

        What a bunch of crap. These are all jobs and commerce that would be REPLACED by a robust and growing EV industry. Newer, more technical, cleaner, forward-looking jobs… with a future.

        As gas-powered automobiles came on the scene, lots of horse trainers and carriage builders lost their jobs. Some jobs were simply lost, of course, but this did not mean that people could not transition into the new industry (maybe become a mechanic instead of a horse trainer). Other jobs might transition more easily (carriage builders, for example).

  5. kdawg says:

    This sentence didn’t make sense to me.

    “Virginia has made 14 exceptions to the rule that prohibits automakers from automakers as dealerships.”

    Was it supposed to be “acting as dealerships”?

    1. Jay Cole says:

      That sounds better to me, (= I sent Eric a note about it…but I changed it myself until then anyway. Thanks KD

  6. Rick Danger says:

    This question should find it’s way on every state ballot: “Do you support current laws forcing auto manufacturers to sell their cars through a network of dealers?” Y N

  7. MDEV says:

    In America we have two countries, one is a 3rd world system and the other is 1st industrialized country. I live in Virginia were ultrasound for women is mandatory and the sale of Tesla is ban. Tesla should offer a gun or assault rifle with the purchase of a Tesla model S and it will be approved by tomorrow.

    1. Steven says:

      Oh great, so the red states will sell Tesla’s with gun racks preinstalled?

  8. qwerty says:

    Dealerships are a rip off. One person $x and they drive off the lot and drive by another dealer to see the same car they bought for either less or more.

    So in either circumstance, someone feels screwed.